BCB Bancorp (BCBP) Q3 2026 Earnings Report

The call was strongly positive overall. Management reported meaningful improvements in net interest margin, classified loans, reserve coverage, nonperforming loans, and the Business Express portfolio, while also highlighting a successful capital raise and progress toward resolving legacy credit issues. The primary challenges were residual credit risk, the $60 million deferred tax asset valuation allowance, dilution from the capital raise, and temporarily elevated restructuring and transaction expenses.

Management expects the sale of the remaining cannabis portfolio of loans and deposits in the fourth quarter, with about $70 million to $80 million in deposits and about $70 million in loans, and said it is “pretty far along.” Professional and legal fees will continue to be “a little bit higher” in the fourth quarter, while “the lion’s share” of the about $5 million of higher expenses this quarter should start to drop away; Jawad Chaudhry said “probably $2.5 million-$3 million” of elevated expenses was tied to transactions, “a good portion” of which should fall back in the fourth quarter, although it is difficult to give a precise estimate. Management also anticipates additional problem loans being favorably resolved in “a few one-off type transactions,” expects “some recoveries” and “positive volatility,” and said the first opportunity to reconsider the $60 million deferred tax asset valuation allowance would be “by the end of 2027,” assuming both quantity and quality of earnings in each of the next five quarters support the decision.